Would you bet millions of dollars on your ability to accurately predict how the IRS will interpret the tax code? That’s what a plan sponsor that adopts a plan that isn’t approved by the IRS does. Even though they are not legally required to obtain determination letters, virtually all plan sponsors with their own plan documents apply regularly for favorable determination letters approving their plan language.

The Internal Revenue Service has just announced that it is not only discontinuing its requirement that individually-designed plans seeking approval be reviewed for new determination letters every five years, but it will no longer review these plans except on adoption and termination. The excuse given is lack of manpower and resources, but the decision leaves adopters of individually-designed plans in a quandary.

How are they to make sure that their plans are in compliance, given the seemingly ever-changing statutory and regulatory requirements and the serious consequences, up to retroactive disqualification, for failure to do it right? Continue Reading

When British Columbia’sPension Benefits Standards Actcomes into force on September 30, 2015, employers that sponsor plans in British Columbia will have more plan design options available to them. Following New Brunswick and Alberta, both of which currently have comprehensive target benefit regimes in place, British Columbia’s pension laws will soon include provisions for target benefits plans (TBPs). Continue Reading

Score one for the opponents of de-risking. The U.S. Internal Revenue Service has just announced that it will be amending its regulations on required minimum distributions to prohibit offering lump sum windows to retirees in pay status. This is a 180 degree about face for the IRS, which previously issued private letter rulings to large sponsors, including Ford and General Motors, permitting these lump sum cash outs.

This new approach follows a report from the General Accounting Office that found a sample of de-risking disclosures provided to participants to be deficient, as well as pressure from groups such as AARP to curb de-risking practices. The AARP has argued that de-risking practices cause retirees to lose PBGC insurance protection, singling out cash outs that require retirees to manage their own investments. Continue Reading

In our previous two articles in this series (Part I and Part II), we considered issues related to setting up an Alberta (and eventually BC) defined benefit plan solvency reserve account (SRA) and sponsor verses administrator roles in establishing, and making withdrawals from, an SRA. In this post, we examine the issue of benefit and plan administration expense payments from an SRA.

You will recall that to eliminate any possibility of existing plan trust wording restricting the intended operation of the SRA, the recommended approach is to establish the SRA through a separate plan trust agreement supported by appropriate plan amendments. This would result in the pension plan being funded through two or more trusts. So far so good, as there is no legislative restrictions on plans having multiple trust funds. Continue Reading

Following the release of the D’Amours Report in 2013, which provided recommendations on how to improve Quebec’s retirement income system, the Quebec government was widely expected to reform the funding of Quebec registered private-sector pension plans.

After nearly two years of consultation with various stakeholders (and a change in government), the Quebec government introduced Bill 57 in the National Assembly (An Act to amend the Supplemental Pension Plans Act mainly with respect to the funding of defined benefit pension plans), which includes the following amendments to the SPPA:

Solvency Funding: The most significant change in Bill 57 is the proposed elimination of the requirement to fund a plan on a solvency basis. The solvency of a plan would, however, still have to be determined and used for certain purposes (e.g., limits on the use of surplus while the plan is ongoing and on transfers of commuted values out of the plan). Continue Reading

In this engaging webinar, “An In-Depth Look at Plan Investments: Recent and Upcoming Changes to Legislation and Policy”, our panel of pension investment experts will discuss recent and upcoming investment regulatory amendments, policies and initiatives. The panel, which includes Tony Devir, Anna Zalewski, Julien Ranger and Lori Stein, will examine the impact and implications of investment-related legislative and policy changes for plan administrators and other key players. You will come away from this webinar with a practical list of top 2015 Investments To-Dos.

To register for the webinar, please select the date that works best for you – June 16 or 25 – by clicking here or contact Lindsay Taylor seminars@osler.com for further information.

Are there time limits on a participant’s ability to challenge imprudent 401(k) investment fund offerings? Can participants challenge an investment fund selected ten or even twenty years ago? If so, will fiduciaries be subject to potential liability for losses going back decades?

The U.S. Supreme Court has just released its long-awaited decision in Tibble v Edison, holding that participants are not prevented from challenging a plan fiduciary’s imprudent 401(k) investment choices if the investment was selected more than six years ago. This means that there is not a one-time six year window for challenging imprudent investment offerings. Continue Reading

While it is undeniable that the proposal would meaningfully expand the class of advisers who are fiduciaries, neither of these opposing responses is likely to be true. Does anyone really believe that advisers will give up such a lucrative market?

The devil is in the details, and objective observers should conclude that it is too early to tell exactly how this complicated proposal will affect the advice market. But it is, in fact, a proposal, not a final rule, and public comments may bring about some needed clarifications and changes. (A coalition has asked the DOL to extend the comment period to 120 days from the 75-day period in the proposal, but indications are that the DOL response will be negative.) Continue Reading

In Part I of this series, we considered issues related to setting up a solvency reserve account (SRA) for an Alberta (and eventually British Columbia) defined benefit plan, SRA withdrawals and multi-jurisdictional plans. In this post we will discuss sponsor versus administrator roles and who is authorized to establish and make withdrawals from an SRA. Continue Reading

The Guidance Note was released in draft form in October of last year and has been modified following a period of public comment. While the Guidance Note does not represent a legislative change, it is nonetheless significant in that it provides guidance as to the prudential expectations that the Ontario regulator has regarding derivatives investments.

As noted in an earlier blog post on the draft Guidance Note, the Note is framed as a set of starting point expectations for plan administrators investing in derivatives. It contemplates a system for internal oversight of derivatives investment practices that is extremely broad in scope. Continue Reading